The percent-of-sales method calculates bad debts expense as a percentage of net credit sales.

Name: The percent-of-sales method calculates bad debts expense as a percentage of net credit sales.
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Question

Quizplus · Accepted Answer

The percent-of-sales method is used to estimate bad debts expense by calculating a percentage of net credit sales. This percentage is based on historical data of the percentage of credit sales that result in bad debts. Therefore, the statement is true.

The Percent-Of-Sales Method Calculates Bad Debts Expense as a Percentage